Building a Reliable Courier Service from the Ground Up

Here are the key factors to keep in mind when launching your courier business:

1. Transportation — Depending on your market research, decide on the type of transportation that best suits your business needs—motorcycles, bicycles, vans, or trucks. Consider factors like fuel efficiency, maintenance costs, and cargo capacity.
2. Tracking and scheduling — Invest in reliable technology to manage orders, track deliveries in real-time, and maintain communication between dispatchers, drivers, and customers. Examples include Onfleet, Route4Me, and Tookan.
3. Franchise — There are a few franchises to choose from such as The UPS Store, Fastway Couriers (now part of the Aramex family), and InXpress.
4. Insurance — You’ll need various types of insurance, such as vehicle insurance, goods in transit insurance, public liability insurance, and possibly employer’s liability insurance if you’re hiring employees.
5. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
6. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.
7. Partnerships — Build relationships with people and businesses that might need your services.

Step 1: Decide if the Business Is Right for You

Pros and cons

Every business has pros and cons that you should weigh before you decide if a courier business is right for you.

Courier services industry trends

Research firm Technavio expects the global courier market to expand an additional 40% by 2025, when it will be worth close to half a trillion dollars. The opportunity is there for the bold entrepreneur.((https://www.technavio.com/report/courier-express-and-parcel-market-size-industry-analysis))

For a local courier, B2B (business-to-business) deliveries of important documents represent a significant opportunity. At the same time, when business is slow you could work as a courier for apps like DoorDash, Instacart, and Postmates and build up a reputation through customer reviews.

Industry size and growth

• Industry size and past growth – Market analyst IBISWorld values the US courier and delivery services market at almost $150 billion, after growing nearly 7% annually over the last five years.((https://www.ibisworld.com/industry-statistics/market-size/couriers-local-delivery-services-united-states/)) 
• Growth forecast – The US courier and local delivery services market is predicted to grow further by more than 4% per year through 2026.((https://www.technavio.com/report/courier-and-local-delivery-services-market-in-us-industry-size-analysis&nowebp)) 
• Number of businesses – More than 365,000 courier and delivery services businesses are operating in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/couriers-local-delivery-services-united-states/))
• Number of people employed – The industry employs around 1.5 million people in the US.((https://www.ibisworld.com/industry-statistics/employment/couriers-local-delivery-services-united-states/))

Trends and challenges

Courier services trends include:

• More business-to-consumer (B2C) deliveries as ecommerce expands rapidly
• Increasing use of technology in tracking packages and keeping customers updated

Challenges in courier industry include:

• High level of competition
• Risk of lost or damaged packages, and road accidents

What kind of people work as couriers?

• Gender – 74% of couriers in the US are male, while 26% are female.((https://www.zippia.com/courier-jobs/demographics/#gender-statistics))
• Average level of education – 35% of couriers hold a bachelor’s degree and 28% have a high school diploma.((https://www.zippia.com/courier-jobs/demographics/#degree-level-types))
• Average age – The average age of a courier is 42 years old.((https://www.zippia.com/courier-jobs/demographics/#age-statistics))

How much does it cost to start a courier business?

Startup costs for a courier business range from under $2,000 to around $25,000. The high end includes purchasing a vehicle. So if you already have one, or plan to start your business small with a bike or scooter, don’t worry about that. On the other hand, if you want to start off with big delivery potential, you could invest in a used truck or van.

Startup Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 - $200	$175
Licenses and permits	$200 - $300	$250
Insurance	$100 - $300	$200
Business cards and brochures	$200 - $300	$250
Website setup	$1,000 - $3,000	$2,000
Vehicle	$0 - $20,000	$10,000
Initial marketing budget	$200 - $500	$350
Total	$1,850 - $24,600	$13,225

How much can you earn from a courier business?

For a local delivery that takes 30 minutes, the average price is about $22.50. Assuming you start out as a solopreneur, your delivery costs will be time and possibly fuel, so your profit margin should be around 90%.

In your first year or two, you might do 10 deliveries five days per week, bringing in almost $60,000 in annual revenue. This would mean over $52,000 in profit, assuming that 90% margin. As your brand gains recognition, you might hire couriers and rent out an office and make 50 deliveries a day. Your margin would fall to maybe 40%, but with annual revenue of nearly $300,000 you’d have a pre-tax profit of $120,000.

What barriers to entry are there?

There are a few barriers to entry for a courier business. Your biggest challenges will be:

• Transportation – Whatever it is, it needs to be extremely reliable
• Competition – You’ll need to stand out to attract clients

Step 2: Hone Your Idea

Now that you know what’s involved in starting a courier business, it’s a good idea to hone your concept in preparation to enter a competitive market.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research courier services in your area to see what services they offer, their prices, and how their customers rate them.

Customers could order an item from a local shop, for instance, then hire you from your app to pick it up and deliver it to them.

This would be targeting a niche market and could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine your services

You will need to decide what kinds of deliveries you will make and how far you will travel. Obviously your choice of delivery vehicle — whether a car or bike — will go some way in determining your range.

Also, do you want to do only B2B, or do you want to include B2C deliveries within a 10-mile radius? You could offer a prescription delivery service, a medical item delivery service for medical offices, or you could decide to offer a variety of services.

How much should you charge for courier services?

The average cost of a 30-minute delivery is $22.50, which is the equivalent of $45 per hour. Some couriers charge by distance instead, at an average of $1.50-$2 per mile. If you deliver heavier items, you can charge more. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on the services you offer. If you have a B2B courier business, your target market will be mainly professionals like doctors, lawyers, designers and architects, so LinkedIn would be a good place to advertise your services.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Courier Company Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “courier” or “delivery”, boosts SEO
• Choose a name that allows for expansion: “Ace Delivery Solutions” over “Restaurant and Food Delivery”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Courier Business Plan

Here are the key components of a business plan:

• Executive Summary: A brief overview outlining the core elements of the courier business plan, summarizing its objectives, strategies, and potential for success.
• Business Overview: A concise description of the courier business, including its mission, vision, and the specific niche or target market it aims to serve.
• Product and Services: Detailed information on the range of courier services offered, such as express delivery, package tracking, and any unique features that set the business apart.
• Market Analysis: An examination of the target market, encompassing size, demographics, and trends, to identify opportunities and challenges in the courier industry.
• Competitive Analysis: A thorough evaluation of competitors in the courier sector, highlighting strengths, weaknesses, and strategies to position the business competitively.
• Sales and Marketing: A comprehensive plan detailing how the courier business intends to attract and retain customers, encompassing advertising, promotions, and customer relationship management.
• Management Team: An introduction to the key individuals responsible for leading and managing the courier business, outlining their expertise and roles.
• Operations Plan: A clear outline of the day-to-day operations, logistics, and infrastructure required to efficiently run the courier service, including delivery routes and technology systems.
• Financial Plan: A detailed projection of the financial aspects, including startup costs, revenue forecasts, and profit margins, to provide a clear picture of the business’s financial viability.
• Appendix: Supplementary materials, such as market research data, resumes of key team members, and any additional information supporting and enhancing the overall business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to a courier business.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your courier business will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business. This option is probably not feasible if you are just starting out as a one-man show, but as you start to grow, it may be an option with the right plan.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a courier business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Courier Business Licenses and Permits

Starting a courier business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your courier business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You can use industry-specific software, such as connecteam, OnTime360, or Track- POD, to schedule and manage deliveries and track revenues.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

• Professional Branding — Ensure your branding communicates speed, efficiency, and trustworthiness through consistent elements like your logo, vehicle decals, uniforms, and website design.
• Website & SEO — Develop a user-friendly website that clearly outlines your services, delivery options, tracking features, and contact information, optimized for search terms relevant to courier and local delivery services.
• Direct Outreach — Network with local businesses, e-commerce retailers, law firms, medical facilities, and other organizations that frequently require reliable courier services.
• Social Media Engagement — Utilize LinkedIn for B2B networking and Facebook to connect with local businesses and the community, sharing updates about your services and successful delivery stories.
• Content Marketing — Manage a logistics and delivery blog to discuss industry tips, efficient shipping practices, and current trends, supplemented by educational videos on using your services effectively.
• Business Collaborations — Form strategic partnerships with local businesses for their regular delivery needs and with e-commerce platforms to handle their local shipments.
• Customer Loyalty Programs — Offer business account packages with competitive rates for frequent users and a referral program that rewards clients for bringing new business.
• Local Advertising — Promote your services through local newspapers, business directories, and targeted online advertising to reach specific markets or communities.
• Email Marketing — Develop a strategy for regular newsletters to keep clients informed about new services, promotional offers, and updates in the logistics and courier sectors.
• Customized Service Packages — Create tailored service options for diverse client needs, ensuring flexibility and reliability in your offerings to enhance customer satisfaction and retention.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your courier business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its strong USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your courier business could be:

• Guaranteed on-time document delivery
• Fastest deliveries in town – we’ll be there in a flash!
• Safe specimen-to-lab deliveries

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a delivery business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working as a courier for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in courier services. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a courier business would include:

• Couriers – Make pickups and deliveries
• Dispatcher – Take orders and dispatch couriers
• Marketing Lead – SEO strategies, social media, other marketing

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Courier Business – Start Making Money!

The courier market is booming, and the business is not complicated. The market is poised for further expansion as customers continue to make online purchases and seek to have them delivered as soon as possible. So why not get in on the action? 

You can start your courier business as a one-person show and grow over time to become the new Instacart or DHL. It will take time, but if you hit the ground running and give it your all, you can be successful.

You’ve started off well by getting the right knowledge, and now your entrepreneurial journey should deliver success!

Common Questions

Is a courier business profitable?

Yes, a courier business can be very profitable. You should be able to bring in about $40 to $45 an hour just working by yourself. It’s a business that you can grow by adding other drivers, and eventually, make into the 6 figures or even more!

How long does it take to start a courier business?

You can start very quickly if you have a reliable vehicle. You’ll just need to market yourself to start getting clients, and then you can get on the road!

How do I get clients for my courier business?

First of all, you should have a website for your courier business so that potential customers can find you and order your services. You could also call local professional businesses, such as law firms, to offer your services.

How do I ensure the security of the items I’m delivering?

You should have some kind of container in your vehicle to keep items from falling. You also need to keep your car secure at all times. 

How do I handle customer inquiries and complaints?

You should respond to customer complaints quickly and try to resolve issues. In some cases, you may need to offer a refund.